Despite the probable collapse of CIT, and bad numbers for Morgan Stanley, which by the way is looking like a true state of a bank and not one which has been diluted with government incentives, we still rally as the dollar weakens, commodity prices rally and bonds fall.
This is the 11th consecutive day of rally for the Nasdaq and the 10th for some European indexes!
Many analysts believe the worst is behind us, but what will be very interesting is how the banks fair once all the government incentives are stopped, like the closing of the central bank discount windows, and TARP underwriting.
The economy is still very fragile and in my opinion the stock market is just basically a sentiment index, and isn't painting the true picture out there. There is still very little job creation and hence consumer expenditure will still be under pressure for time to come. Until this changes things will not improve.
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